Reuse of a Company Name

Re-use of a company name after liquidation The law restricts the re-use of a name previously used by a company that has gone into insolvent liquidation (section 216 of The Insolvency Act 1986). This restriction applies personally to a director of the company in insolvent liquidation. The name which can't be used is known as the "prohibited name".

This leaflet explains what re-use of a prohibited name means. It does not give a complete list of everything you must and must not do, nor does it give you legal advice.

To understand exactly how the restrictions affect you, you should always take your own independent professional advice.

What is a prohibited name?

A prohibited name is a name by which the liquidated company was known at any time in the 12 months immediately before the liquidation: whether this is its registered name at Companies House, or its trading name, or any name so similar to its registered or trading name as to suggest an association with the liquidated company.

Who is restricted?

The restriction applies to a person who was registered as a director or acted as a director of the company in insolvent liquidation at any time during the 12 months immediately before the liquidation.

What is the restriction?

For 5 years from the date of liquidation, you are not permitted to be a director of or take part in the promotion, formation or management of a limited company that is using a prohibited name. In addition you may not be concerned in or take any part in carrying on a business that is using a prohibited name if the business is not a limited company (for example, if it is a partnership or sole trader).

What is an example of a prohibited name?

Say the company in insolvent liquidation was registered at Companies House as ABC Limited and it used the trading name XYZ, then the following would apply:

 The registered name ABC Limited or XYZ Limited would be prohibited.  The trading name ABC or XYZ would be prohibited.  The trading name ABC or XYZ used by an unincorporated business (such as a sole trader or partnership) would be prohibited.  If a company or business had a registered name or trading name so similar as to suggest an association with ABC or XYZ, the name would be prohibited. Exceptions

There are three exceptions to the restrictions on the re-use of a prohibited name.

First exception: Sale of business

You may use the name if you give the required notice when the whole, or substantially the whole, of the business of the company in insolvent liquidation is sold by the liquidator and you intend to act with regards to that business in a manner that would otherwise be prohibited to you. If this happens, or is intended to happen under arrangements made by an administrator, administrative receiver or supervisor of a voluntary arrangement of the insolvent company, you must use a prescribed form (form 4.73) to publish a Notice in the Gazette and also send it to all creditors known to you or whose names and addresses could be obtained by you by making reasonable enquiries. The prescribed form 4.73 can be downloaded through the following internet link: http://www.legislation.gov.uk/uksi/2007/1974/schedule/made. The Notice may be published and given before the completion of the sale arrangements but must be published and given no later than 28 days after completion.

Second exception: Immediate application to court for permission

You can get permission from the court to use the prohibited name. You should apply to the court within 7 business days of the liquidation. If you apply within that time, you may carry on using the prohibited name for 6 weeks from the date of the liquidation or until the court decides whether to grant you permission, whichever is the earlier. It is important that your application is heard within the 6 weeks; otherwise the restriction will again apply to you.

The court can grant permission at any time during the 5 years that a name is prohibited, but it cannot retrospectively authorise use of a prohibited name for any time during the period before it gave permission.

If a company has gone into compulsory liquidation (i.e. your company in liquidation was wound up in the court and was dealt with by the official receiver), you should apply for permission to the same court that made the winding-up order. If a company has gone into voluntary liquidation, you should apply for permission to any county court in the area where the company traded, as long as that county court has the jurisdiction to wind up companies.

If you apply to the court for permission to use a prohibited name, you should send a copy of your application to The Intelligence Hub, Investigations & Enforcement Services, The Insolvency Service, 3rd Floor Cannon House, 18 Priory Queensway, Birmingham, B4 6FD. Email: [email protected]. This is because the court may call on the liquidator, or any former liquidator, to report the circumstances in which the liquidated company became insolvent, and the extent (if any) of your responsibility for the insolvency.

Third exception: Previous use of name by another company or business

The restriction on the re-use of a prohibited name does not apply to you if you are a director of another company that has used a prohibited name continuously for 12 months up to the date of the liquidation of the liquidated company. In these specific circumstances your use of a name would not be prohibited, even though the name was also used by the liquidated company. However, your company must have been actively trading during the whole of the 12 months up to the date of the liquidation of the liquidated company, and must have used the name during the whole of that period. If your company was dormant (not actively trading) during any part of the 12 months or used the name during only part of the period, then the restriction will apply and you will not be allowed to re-use the prohibited name, without the permission of the court. Penalties

If you contravene section 216 of the Act, you are committing a criminal offence. You may be prosecuted by the Department for Business Innovation and Skills and could go to prison if you are convicted. In addition, under section 217 of the Act you could be made personally liable for the debts incurred during the time that you were involved in managing a business using a prohibited name, even if it was a limited company. This could happen whether you are prosecuted under section 216 or not.

Person who helps someone else contravene section 216

Even if you are not contravening Section 216 of the Act, you will be personally liable for the debts of a company if you agree to be registered as a company director and/or are involved in managing a business and you act on instructions from someone you know is contravening section 216. This is because you are helping someone to commit a criminal offence by contravening section 216.

Where can I find out more?

Our publications give general information about insolvency procedures.

You can obtain further copies of this publication from The Insolvency Service website: www.bis.gov.uk/insolvency/publications. All our publications are available on this web page.

For general enquiries you can contact The Insolvency Service Insolvency Enquiry Line on 0845 602 9848 or email [email protected].

Please note that the Enquiry Line can only give general information about insolvency. If your query relates to a specific case then you should either contact the officer dealing with that case or obtain independent professional advice as appropriate.

Her Majesty’s Courts and Tribunals Service publishes a series of information publications and contact details on their website at: http://www.justice.gov.uk/global/contacts/hmcts/index.htm.

This leaflet provides general information only. Every effort has been made to ensure that the information is accurate, but it is not a full and authoritative statement of the law and you should not rely on it as such. The Insolvency Service cannot accept any responsibility for any errors or omissions as a result of negligence or otherwise.

You may re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit http://www.nationalarchives.gov.uk/doc/open-government-licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or e-mail: [email protected].

March 2012 URN 12/640